Why a green bud­get is good for the econ­omy

The Pak Banker - - OPINION - Ba­har Dutt

MAK­ING a coun­try's bud­get green is not about how much money is al­lot­ted to tiger or for­est pro­tec­tion. It is about in­te­grat­ing it into ev­ery as­pect of your econ­omy and en­sur­ing there is no waste­ful use of nat­u­ral re­sources. For years, green is­sues were ei­ther over­looked or hastily added as an ap­pendage to the fi­nance min­is­ter's bud­get speech in Par­lia­ment. While this time round, Arun Jait­ley may have done bet­ter, we are still a long way from en­sur­ing that there is full in­te­gra­tion of green con­cerns into all aspects of the econ­omy or a recog­ni­tion by our politi­cians that in­vest­ing in the en­vi­ron­ment is good for the econ­omy as well.

A care­ful pe­rusal of Jait­ley's speech shows that he has slashed the bud­get of the min­istry of en­vi­ron­ment, forests and cli­mate change, al­though a sub­se­quent PTIre­port dis­putes this since money from other pro­grammes has been added to the en­vi­ron­ment min­istry's kitty. The funds for the min­istry of new and re­new­able en­ergy have also been re­duced even as an in­crease in the gen­er­a­tion tar­get for re­new­able en­ergy has been an­nounced, to 175,000 megawatts by 2022.

On the pos­i­tive side, there has been some at­tempt to dis­cour­age "dirty coal" through an in­crease in the clean en­ergy cess from Rs.100 to Rs.200 per tonne of coal to fi­nance clean en­vi­ron­ment ini­tia­tives. How­ever, there is no clar­ity on how this money will be used for clean en­vi­ron­ment ini­tia­tives and by which depart­ment of the govern­ment, given that pre­vi­ous funds too are ly­ing un­used.

The fi­nance min­is­ter also an­nounced around Rs.150 crore for the na­tional af­foresta­tion pro­gramme, a sep­a­rate pro­gramme for sus­tain­able ground­wa­ter man­age­ment and the set­ting up of a Rs.400 crore fund to en­cour­age or­ganic farm­ing.

How­ever, for all the grand com­mit­ments that In­dia made at the Paris cli­mate sum­mit what is miss­ing in this bud­get is a con­scious tran­si­tion to a low-car­bon econ­omy. There are some ini­tial shoots of change that can be seen through the in­fra­struc­ture cess on pri­vate cars, as Arunabha Ghosh and Ab­hishek Jain of the Coun­cil on En­ergy, En­vi­ron­ment and Wa­ter write in Mint, but th­ese are far from rad­i­cal.

Here is what is miss­ing-any men­tion of al­lo­ca­tion of funds for the pro­tec­tion of In­dia's large swathes of ex­ist­ing forests, lakes, wetlands and wa­ter re­sources or the bio­di­ver­sity found in them as th­ese are the driv­ers of the na­tion's eco­nomic growth and health.

From min­er­als ex­tracted from the forests to sev­eral thou­sand tonnes of sand re­moved from our river beds, nat­u­ral re­sources fuel the econ­omy in all forms by pro­vid­ing raw ma­te­rial for high-rise build­ings, wa­ter for ther­mal power plants. What are we do­ing to re­store and pro­tect th­ese nat­u­ral re­sources so they con­tinue to power our econ­omy? Apart from a men­tion of a fund for pro­tect­ing ground­wa­ter, the bud­get as­sumes that growth can hap­pen with­out th­ese nat­u­ral re­sources.

In Novem­ber 2011, the United Na­tions En­vi­ron­ment Pro­gramme re­leased the Green Econ­omy Re­port, com­piled by hun­dreds of econ­o­mists from around the world, with the aim of demon­strat­ing the ben­e­fits of tran­si­tion­ing to a green econ­omy. The re­port shows how "a strat­egy of re­al­lo­cat­ing in­vest­ments to­wards the green econ­omy may lead to slower po­ten­tial eco­nomic growth for a few years, as re­new­able nat­u­ral re­sources are re­plen­ished (an ef­fect that can be strong in some sec­tors, such as fish­eries), but will re­sult in the long run in faster eco­nomic growth". The re­port also un­der­lines other ben­e­fits to the econ­omy as it re­duces the risks of ad­verse events as­so­ci­ated with cli­mate change, en­ergy shocks and wa­ter scarcity while cre­at­ing in­creased em­ploy­ment.

So dear fi­nance min­is­ter, the next time around how about the cre­ation of a green pro­tec­tion fund? This fund could be used to pro­tect ex­ist­ing for­est belts, let our rivers flow free of garbage and sludge, pro­vide front-line for­est pro­tec­tion staff with bet­ter equip­ment, and bet­ter pro­tect our rich bio­di­ver­sity.

The ad­van­tages of in­vest­ing in our nat­u­ral re­sources are many. For in­stance, the Cen­ter for In­ter­na­tional Forestry Re­search es­ti­mates that fam­i­lies liv­ing in and around forests de­rive an av­er­age of one-fifth to one-fourth of their in­come from for­est-based re­sources.

In many coun­tries, in­clud­ing In­dia, non­tim­ber for­est prod­ucts con­trib­ute promi­nently to lo­cal economies and liveli­hoods, though their role is un­der­stated. The Food and Agri­cul­ture Or­ga­ni­za­tion es­ti­mated in 2005 that the value of non-tim­ber for­est prod­ucts ex­tracted from forests world­wide amounted to $18.5 bil­lion.

Un­for­tu­nately, the value and ser­vices that forests ren­der are rarely cap­tured in na­tional ac­count­ing sys­tems. A green bud­get is needed not just to sat­isfy fringe tree hug­gers like me; it's needed to fuel that in­tense eco­nomic growth you want for the coun­try.

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